Overview of the Senate budget proposal
Late last evening, the Senate leadership released their proposed $20.6 billion budget for FY2013-14. This proposal fails to fully invest the slight uptick in revenues into the public priorities that ensure better opportunities for all children, help get North Carolinians back to work, and rebuild the middle class.
Furthermore, by linking this proposal to their revenue-reducing tax plan, Senate leadership fails to lay a foundation for a strong economy and thriving families and communities. Over the biennium, the Senate tax package would reduce available revenues by $217.1 million in FY2013-14 and $553.1 million in FY2014-15. As we mentioned last week, these tax cuts would primarily benefit the wealthiest residents and corporations and would extend well beyond the next biennium.
As illustrated in the chart below, the Senate proposal for FY2013-14 would increase spending by 1.7 percent over the base budget. Yet, spending would drop by .1 percent and 8.5 percent, respectively, compared to the Governor’s proposal and pre-recession levels (FY2007-08, adjusted).
The Senate Appropriations Subcommittees will meet this afternoon to review, discuss, and vote on the appropriation items and special provisions in their respective budget areas. My colleges and I at the Budget and Tax Center reviewed the 159-page Money Report and put together a short list of noteworthy items in the major budget areas:
- Allocates nearly $11.8 million to account for the projected increase in student enrollment in FY 2013-14. Also, provides $5.1 million in pass-through funding to Teach for America.
- Provides nearly $18.6 to implement the Excellent Public Schools Act.
- Eliminates the LEA Adjustment line item, which represents the total amount of state appropriated dollars local schools must return to the state via local budget cuts and/or adjustments. The cuts in funding via the LEA Adjustment line item is now allocated across multiple programs within the Senate’s proposed budget, with funding for classroom teachers incurring the largest cut. Thus, the funding cuts via LEA Adjustment still exist:
- $286.4 million in funding cuts for classroom teachers for FY2013-14, representing 76 percent of the total LEA Adjustment funding included in the proposed budget.
- $23.9 million in funding cuts for instructional support personnel and supplies, representing 6 percent of the total LEA Adjustment funding included in the proposed budget.
- Changes the funding formula, triggering a $19.8 million reduction in funding for colleges.
- Increases curriculum tuition by $2.50 per credit hour.
- Reduces funding for minority male mentoring program but increases the program’s mandate to serve a larger universe of students who are at-risk of not completing their program.
- Implements performance funding metrics oriented towards completion of certificates and degrees.
- Implements a significant management flexibility reduction ($47.9 million) that will require the Board of Governors to make decisions about fund allocation across campuses.
- Establishes the UNC Need Based Financial Aid Forward Funding Reserve to fund need-based grants to students and holds need-based grants down.
- Implements a tuition surcharge for students taking more than 110 percent of the credit hours to complete their degree, which would impact students who are struggling with academic coursework or balancing work and study.
Health and Human Services
- Provides $434 million in FY2013-14 to fully fund the projected enrollment growth in the number of people eligible for the Medicaid Program. Yet, it cuts the number of doctor visits covered for participants from 22 to 10 visits, raises co-pays, and lowers reimbursement rates for providers. It also reduces the income eligibility of pregnant women from 185 percent to 133 percent of the federal poverty level.
- Cuts the NC Pre-K program by 2,500 slots in FY2013-14 and 5,000 in FY2014-15—or $12.4 million and $24.9 million, respectively—and shifts the funds to pay for child care subsidies.
- Closes 3 state-run Alcohol and Drug Abuse Treatment Centers, and shifts some of the savings to fund other community-based substance abuse treatment programs.
Natural and Economic Resources
- After two years of steep reductions, DENR receives a $48 million (45 percent) expansion over continuation. However the bulk of this comes from shifting DENR administered off-budget trust funds to on-budget Authorities and programs.
- Creates new Division of Rural Economic Development that essentially replaces the NC Rural Economic Development Center. Only $7 million is appropriated for the new Division, while the NC Rural Center was funded at $16 million. This represents a 50 percent reduction in rural economic development funding.
- Reduces overall appropriations for Commerce-State Aid by 50.2 million—an 85% reduction to just $9.2 million. Recurring funding is completely eliminated for the following nonprofits:
- Biofuels Center
- Community Development Initiative
- Council of Governments (COGs)
- Grassroots Science Museums
- Institute of Minority Economic Development
- Land Loss Prevention Project
- NC Agriculture Foundation (FFA Foundation)
- NC Association of Community Development Corporations (CDCs)
- NC Farm Bureau – Ag in the Classroom
- NC Indian Economic Development Initiative
- Partnership for the Sounds
- Regional Economic Development Commissions
- The Support Center
Tomorrow, we will break down the general fund availability statement to give you an idea of how the Senate leadership pays for their budget.